Gotcha! Here is the problem: SP2. Some stuff LU needs in order to work aren't compatible anymore with anything lower than SP3, so there you go, update to SP3, reinstall LU and let him auto download that itself.
EDIT: I previously posted the link to what you needed but then I wasn't too sure you actually needed that, so I removed it
OT: btw SugarD in one of your previous post in this topic you said something about "piracy" and "using Steam game with non-Steam exe", but I'm quite sure, as long as you own the original game, it shouldn't be a problem to use a no cd exe or stuff like that, should it?